Retail stocks are lower than broad market averages after Target (TGT-9.3%) sets a gloomy tone on U.S. consumer spending. There was a sense of bewilderment from Target in its release and earnings call commentary over the slowdown in sales post-Easter.

Wal-Mart is down an even 3% to reach a multi-month low ahead of tomorrow's earnings report.

Shares of Best Buy (NYSE:BBY) are 3.2% lower after the soft read from Target tilts sentiment. The electronics chain reports earnings on May 24 with analysts expecting revenue of $8.291B and EPS of $0.35 to be disclosed.

Electronics store stocks are weaker after the merger between Office Depot (ODP-38.9%) and Staples (SPLS-16.7%) is scuttled.

Best Buy (BBY-3.4%), Conn's (CONN-6%), and hhgregg (HGG-4.4%) were expected to see at least a marginal impact from a consolidated ODP-SPLS on the view that stores would be closed in certain markets. All three companies still have to spill Q1 numbers which has investors edgy.

Also trading lower is GameStop (GME-4.1%) which may not sell office supplies but is being caught up in the general anxiety over U.S. consumer spending.

Retail stocks slumped yesterday after a weak read on consumer spending. Notable companies with drops of over 2% included Target (NYSE:TGT), Costco (NASDAQ:COST), Urban Outfitters (NASDAQ:URBN), and Macy's (NYSE:M). Wal-Mart (NYSE:WMT) was down 3% to cut into what's been a sizable gain this year.

The damage was inflicted after the personal consumption expenditures price index (ex-food/energy) gained only 0.1% in March to decelerate from February's level.

SA contributor George Putnam hears all the noise about soft store traffic, but still makes the case that companies with good brands, relatively strong balance sheets, and decent dividends are attractive investments.

A value screen of retail stocks indicates that many chain store names may be oversold due to the intense focus by investors on limp comparable-store sales growth (Y/Y) and F/X pressure - two trends seen by some analysts as reversing this year.

Tailored Brands (NYSE:TLRD), Gap (NYSE:GPS), Buckle (NYSE:BKE), Steinmart (NASDAQ:SMRT), American Eagle Outfitters (NYSE:AEO), Macy's (M), GameStop (NYSE:GME), and Best Buy (NYSE:BBY) all made the cut of having a forward P/E of less than 12, a dividend yield of over 2%, and a balance sheet ratio above the sector average.

The game retailer is changing places with Global Payments and heading into the MidCap 400, as Global Payments' market cap will be more reflective of the 500 after its acquisition of Heartland Payment Systems.

Those moves are effective after the close on Friday. In addition, Krispy Kreme Doughnuts (NYSE:KKD) is up 3.9% after hours, replacing Pinnacle Entertainment (NASDAQ:PNK) in the SmallCap 600, as Pinnacle is heading for a spinoff/merger.

The company created a publishing division called GameTrust earlier this year and is now in discussions with at least 20 publishers over potential partnerships, according to MVC. On the creative side of the game developing process, GameStop execs promise a hands-off approach.

GameStop plans to use physical stores as a selling channel for titled incubated through GameTrust in a move that risks irritating major publishers.

GameStop (NYSE:GME) is holding its Investor Day event today with management making a point to call the company a global specialty retailer.

The company set a goal to earn more than 50% of its revenue from outside of the physical games business by 2019. Tech brands are expected to bring in about $1.6B by 2019. Management says GameStop will increase its relevancy in the mobile and consumer electronics space.

The average store contribution per global video game store is seen rising by 8% to 14% by 2019.

Shares of GameStop trade flat on the day with a good portion of the presentation still to come.

In addition to missing FQ4 sales estimates (while beating on EPS), GameStop (NYSE:GME) is guiding for FQ1 revenue to be down 4%-7% Y/Y, below a consensus for 1.3% growth. Net income is expected to drop to $60.5M-$66M from the year-ago period's $73.8M ($0.68/share). That suggests EPS will be below a $0.71 consensus. Same-store sales are expected to be down 7%-9% Y/Y.

FY16 (ends Jan. '17) guidance is for 0%-3% sales growth (compares with a 2.8% consensus) and net income of $407M-$423M (compares with FY15's $415.6M). Consensus has been for EPS to rise to $4.09 from FY15's $3.90. Same-store sales are expected to be flat to down 3%. The FY16 capex budget is at $160M-$170M.

Financials: Lifting FQ4 EPS: Gross margin rose to 150 bps Y/Y to 29.6%. Also helping: $50M was spent to buy back 1.6M shares, leading total FY15 repurchases to amount to $202M (5.22M shares). Hurting EPS: SG&A spend was 17.4% of revenue, up from 15.8% a year ago.